On April 26, 2023, the Secure and Fair Enforcement Banking Act (“SAFE Banking Act”) was reintroduced in the United States Senate and House of Representatives as a standalone, bipartisan and bicameral bill. The SAFE Banking Act aims to increase the ability of state-legal licensed cannabis businesses to access traditional banking services (such as checking accounts and loans) by, among other measures, prohibiting federal regulators from penalizing financial institutions for providing banking services to such businesses.
This is the eighth iteration of the SAFE Banking Act to be introduced by Congress as standalone legislation or as inclusions to other legislation. The past failures of the bill are well documented – seven previous versions have passed the House before stalling in the Senate, largely due to opposition from Democratic Senators who have argued that the bill does not accomplish enough for social equity and criminal justice reform.
It is no coincidence that the most significant change in the latest version of the bill is an expanded social equity component, which includes extending the bill’s protections to community development financial institutions (CDFIs) and minority depository institutions (MDIs), requiring regulators to track and report data on access to financial services for minority-owned, veteran-owned, and women-owned businesses, and permitting cannabis workers to receive federally backed home mortgage loans.
On May 11, 2023, the Senate Banking Committee held its first ever hearing on cannabis banking titled “Examining Cannabis Banking Challenges of Small Businesses and Workers. The testimony focused primarily on the new SAFE Banking Act, as supporters and opposers of the bill discussed the newly added social equity provisions, as well other topics such as the impact of the legislation on anti-money laundering and safety concerns within the cannabis industry. The witnesses included bill co-sponsors Sen. Jeff Merkley (D-Ore.) and Sen. Steve Daines (R-Mont.).
So You’re Telling Me There’s a Chance?
Possibly. The Banking Committee hearing could be a sign that the SAFE Banking Act is finally gaining headway in the Senate. That said, there remains the key question of whether the new social equity provisions are enough to appease past critics like Senate Majority Leader Chuck Schumer (D-NY). On May 13, 2023, while speaking at a cannabis rally in New York City, Sen. Schumer called the SAFE Banking Act “a good thing” but emphasized his desire to add to it further criminal justice provisions, such as expungements for certain low-level cannabis convictions (which he has referred to as “SAFE Banking Plus”).
The SAFE Banking Act of 2023, like its predecessors, will certainly face scrutiny, but it is perhaps the most “passable” version of the bill we have seen to date. As states continue to develop comprehensive legal cannabis programs, the need for cannabis banking reform has never been more pressing. It appears that the federal government is sensing the growing level of concern among cannabis stakeholders; whether this translates into enough votes on Senate Floor remains to be seen.
Bressler’s Cannabis Law Practice will continue to monitor the SAFE Banking Act of 2023.
Read the entire text of the SAFE Banking Act of 2023 here.